The Investment Support Tax Scheme (RFAI) is one of the main tax incentives available in Portugal for companies making productive investments. The scheme is set out in the Investment Tax Code and aims to promote economic growth, job creation and business competitiveness.
The RFAI operates by allowing a percentage of the company’s eligible investment to be deducted from its corporate income tax liability. Generally speaking, the benefit amounts to 25% of the investment up to €15 million and 10% on the amount exceeding that figure.
If the company is unable to utilise the full benefit in a given financial year, the remaining amount may be carried forward to the following ten tax periods, allowing for more efficient tax planning.
Companies subject to corporation tax that operate in certain eligible economic sectors, including manufacturing, information technology, research and development, tourism, catering and certain business services, may benefit from this scheme.
Eligible investments include, for example, machinery and production equipment, certain industrial facilities, as well as intangible assets related to technology transfer, such as patents, licences or technical know-how.
To benefit from the scheme, companies must meet certain requirements, including having organised accounts, having no tax or social security debts, and retaining the assets associated with the investment for a minimum period of three years in the case of SMEs or five years in other cases.
In addition to the corporation tax deduction, the investment may also provide additional benefits, such as exemption from or a reduction in property tax (IMI), transfer tax (IMT) or stamp duty, depending on the nature of the investment and the applicable local authority decisions.
The RFAI may represent a significant opportunity to reduce the tax burden associated with business investment, and it is advisable to assess the investment’s eligibility in advance.
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